The Importance of the Statute of Limitations

The statute of limitations sets the maximum time after an event that legal proceedings, based on that event may, be initiated. You may hear the term thrown around sometimes in dealing with legal issues, but why is the statute of limitations so important? First, there are reasons why a statute of limitation may be appropriate in the first place.


Some reasons for statutes of limitations:


  • Over time evidence can disappear or become corrupted

  • Companies may dispose of records or crime scenes are changed

  • People want to move on with their lives, not having to worry about legal battles

People pay off collection counts and charge-offs every day just because the accounts still appear on their credit reports, but they don’t know that they don’t really have to. Often the statute of limitation has already expired for that open account. Knowing this may give you some relief when you feel bogged down by so much debt. Creditors have limited time to sue you. The statute of limitations starts funding from the day your debt or payment on an open-ended account is due.

Consumers are also paying off accounts that aren’t even on the credit report because a collector spots some activity and contacts them for payment. This account was probably already removed from the credit file. All you have to say to that collector, if they contact you for payment, is something along the lines of “I have an absolute defense – the statute of limitations has expired.”

This doesn’t mean that the statute of limitations makes your debt go away after it expires. It just means you have an absolute defense if the creditor files a lawsuit. Be prepared to offer new evidence, consisting of papers you have filed to support your claim, to avoid judgment. Also, you’re not required to prove that the statute of limitations has expired if being sued by the creditor. That would just bring a judgment as well as a lost lawsuit.